Kennedys’ Post

There are a lot of great (and timely) insights in this article co-authored by my colleagues- check it out!

I've been following the insurance implications of California wildfires. The latest development is debate over allowing insurers to use catastrophe models to determine rates and underwriting. Last month, State Farm cut more policyholders in the state, just after the regulator announced its intent to allow these models, saying it would improve availability and affordability in insurance. Amy Bach, executive director of United Policyholders (UP), an advocacy group, lobbies the California Department of Insurance, saying that opaque and proprietary aspects of Cat models make it impossible for regulatory reviewers to evaluate their projections. She questions insurers’ statements that Cat models make it easier to give discounts for mitigation, pointing out that revised flood risk models elsewhere eliminated mitigation discounts. https://bit.ly/3xx6RdS #PropertyAndCasualty #insurance #CaliforniaWildfires #InsuranceRegulation

Commissioner Lara is revolutionizing the insurance landscape for Californians in high wildfire risk areas. Discover how new regulations encourage insurance companies to increase coverage options through forward-looking catastrophe models. Make sure to check out the details and the first-ever wildfire risk map released by the Department. #InsuranceReform #WildfireRisk #CaliforniaProtection https://bit.ly/4crr0AE

California's recent wildfires have significantly impacted the commercial property insurance market. Insurers are reassessing risks, leading to higher premiums and stricter underwriting standards for businesses in wildfire-prone areas. Some insurers have reduced their exposure or withdrawn from these markets altogether. As a result, many businesses are turning to the California FAIR Plan, which offers basic property insurance carriers decline coverage. However, the FAIR Plan provides limited coverage, and increased demand may lead to higher premiums. To mitigate these challenges, businesses should implement fire-resistant building materials, create defensible space around properties, and engage with insurance professionals to explore all available options. Staying informed about changes in the insurance market is crucial for securing adequate coverage. https://lnkd.in/gEdK8hdj

"Democratic insurance commissioners in the Golden State have for years suppressed rates. Until recently, California was the only state that prohibited carriers from using catastrophe models to project disaster risk and pricing reinsurance costs into their premiums. Wildfires—exacerbated by the state’s poor land mismanagement—have swelled insurer claims and liabilities. Insurers are paying out $1.09 in expenses and claims for every $1 they collect in premiums. They’ve curbed their exposure in part by dropping policy holders in high-risk areas and leaving the market. The liabilities of the state’s insurer of last resort, FAIR, have exploded to $458 billion from $153 billion in 2020, with $5.9 billion in exposure in the Pacific Palisades. Yet Insurance Commissioner Ricardo Lara rejected FAIR’s proposed rate increases while requiring it to cover homes worth up to $3 million."

The recent devastating wildfires in California have raised important questions about their potential ripple effects on the broader insurance market, including Florida. While these events may not have an immediate impact on Florida policyholders, they will apply pressure on the overall market, especially in California. Florida’s property insurance market is already under significant strain due to hurricanes, rising litigation costs, and a challenging regulatory environment. The addition of external pressures, such as catastrophic losses in other states, underscores the interconnected nature of the insurance industry. Understanding these dynamics is essential for anticipating challenges and implementing proactive strategies to safeguard both insurers and policyholders. Monitoring these developments will be critical in navigating the evolving landscape of property insurance.

State Farm cuts 72,000 policies in California, citing wildfire risks. https://bit.ly/3vFBRYn The move comes two weeks after the California Department of Insurance proposed letting carriers use catastrophe modeling, with the rationale that it would stimulate greater availability of wildfire insurance. https://bit.ly/3J7lmra Consumer advocates from Consumer Watchdog and the Consumer Federation of America have previously questioned the use of catastrophe models. https://bit.ly/4cLIUiX #insurance #climatechange #CaliforniaWildfires

🔥 What’s Next for Fire Insurance in California? 🔥 Wildfire risk in California is not only a pressing concern for homeowners, but it's also causing a seismic shift in the insurance industry. With ongoing negotiations between the state and insurance providers to raise premiums, many are asking: What does this mean for the future of fire insurance in CA? But the problem doesn't stop there. The Pacific Northwest is also grappling with similar challenges. In 2024, PacificCorp was hit with an $85 million verdict for its role in the 2020 wildfires, following a $90 million verdict for the same year in 2023. Additionally, a separate set of 2020 wildfires resulted in a massive $299 million settlement. As the risk of wildfires continues to escalate, the impact on insurance companies and policyholders is becoming more significant. Will insurers hike premiums? Could wildfire-related lawsuits become more common? What does this mean for property owners in high-risk zones? Stay informed and prepared as we navigate this critical issue together. If you have questions or need legal advice regarding wildfire claims or insurance matters, our team is here to help. #WildfireRisk #FireInsurance #CaliforniaWildfires #PacificNorthwest #InsuranceIndustry #LawFirm

The devastating wildfires in California are reshaping the insurance industry. With increasing risks and costs, more homeowners are turning to the California FAIR Plan—a state-backed safety net for high-risk areas. But is the FAIR Plan a long-term solution? Read the full blog to explore how the future of insurance in wildfire-prone areas is evolving and what it means for carriers. #CaliforniaWildfires #InsuranceNews #FAIRPlan #HomeownersInsurance #PalisadesFire https://hubs.li/Q033q0Lx0

There has been a lot of discussion about the insurance market in California and the impact from the wildfires. Here is the latest installment of Digital Insurance's coverage of the some of the issues involved in fixing the issues. #wildfires